Understanding Consumer

and Business Markets

Chapter 5
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
 The consumer market
 Geographic distribution, frequently divided
into rural, urban, and suburban.
 Demographics, the vital statistics that
describe a population. In particular:
 Age.
 Gender.
 Family life cycle.
 Education.
 Income distribution.
 Ethnicity.
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 Family life cycle
 Family life cycle will determine the
purchase behaviour of individuals and
reason for purchase.
 Single parent and two-parent family.
 Young couples no children.
 Family (usually two adults, two young
children).
 Family with teenagers.
 Multi-cultural (or mixed) family.
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Slides prepared by Joe Rosagrata
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 Situational influences
 Situational influences are the temporary
forces associated with the immediate
purchase environment that affect behaviour
• When consumers buy—the time influence.
(day, week, season).
• Where consumers buy—the place a
decision is made (home, point of
purchase).
• How consumers buy—the way in which
consumers buy (bulk etc).

Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
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 SOCIAL AND PSYCHOLOGICAL
GROUP FORCES FORCES
Culture Motivation
Subculture Perception
Social class Learning
Reference groups Personality
Family and households Attitude

SITUATIONAL
FACTORS
BUYING-DECISION PROCESS When consumers
INFORMATION buy
Need recognition Where
Commercial consumers buy
sources Identification of alternatives

Evaluation of alternatives Why consumers

buy
Purchase and related decisions Conditions
Social sources under which
Post-purchase behaviour consumers buy

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Slides prepared by Joe Rosagrata
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Consumer buying behaviour
influences
 There are five main Buying Behaviour factors
which influence consumer’s decision-making.
 Motivation.
 Perception.
 Learning.
 Personality.
 Self-concept.

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Slides prepared by Joe Rosagrata
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Consumer buying behaviour
influences (cont.)

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Slides prepared by Joe Rosagrata
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Four demand characteristics that
differentiate the business market from
the consumer market
 Demand is derived from the demand for the
ultimate consumer products in which the
business product is finally used (e.g. steel).
 In the short run demand is inelastic, that is,
demand for a product responds very little to
changes in price when:
 The cost of a single part or material is a
small portion of the total cost of the finished
product.
 If the part or material has no substitute.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
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Copyright © 1997 by The McGraw-Hill Companies, Inc.
 Four demand characteristics that
differentiate the business market from
the consumer market (cont.)

 Demand is widely fluctuating, meaning that

demand for most classes of business goods
fluctuates considerably more than the
demand for consumer products.

 The buyers are well informed and know the

relative merits of alternative sources of
supply and competitive products.
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Slides prepared by Joe Rosagrata
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Influences on business-
market demand

 The number and types of potential

business users.
 Their buying power,
 buying motives,
 and buying habits.

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Slides prepared by Joe Rosagrata
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Key differences between
the business market (BM)
and consumer (CM) market
 Small number of BMs.

 BMs have larger purchasing power and buy

in quantity.

 BMs are concentrated. CMs are not.

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Slides prepared by Joe Rosagrata
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Key differences between
the business market (BM)
and consumer (CM) market
(cont.)
 Sellers deal direct with business users.
 BMs are usually regionally concentrated.
 BMs can be vertically or horizontally
concentrated.
 BM’s buying motives are rational and
purchase is methodical and objective.
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 Types of buying situations

1. New task
 New purchase or product category.
 More people involved in new purchase.
 Extensive information must be collected
and evaluated on alternative products.
 Seller displays creative selling ability in
satisfying buyer needs.

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Types of buying situations
(cont.)
2. Straight re-buy
 Information needs are minimal
 There is no great consideration of
alternatives.
 Buying decision made in the purchasing
department e.g. purchasing of office
supplies.

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Slides prepared by Joe Rosagrata
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Types of buying situations
(cont.)

3. Modified re-buy
 Situation in which the buyer wants to
change (modify) the product specifications,
price, terms, or suppliers.

Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
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The buying centre
 A Buying Centre is all the individuals who
play a part in the various buying roles and who
influence buying decisions, determine product
specification and make the buying decision
• Users—people who actually use the good or
service.
• Influencers—people who set the
specifications of, and help determine
aspects of the buying decision because of
their expertise, financial position, or
political power.
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Slides prepared by Joe Rosagrata
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Types of buying situations
(cont.)
 Deciders—the people who make the actual
buying decision regarding the product and
supplier.
 Gatekeepers—people who control the flow
of purchasing information within the
organisation, as well as between the firm
and potential vendors.
 Buyers—people who select the suppliers,
arrange the terms of the sale and process
the actual purchase orders.
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Slides prepared by Joe Rosagrata
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Buying patterns of
business users
 Direct purchase.
 Frequency of purchases.
 Size of order.
 Length of negotiated period.
 Reciprocity arrangements.
 Service expectations.
 Dependability of supply.
 Leasing instead of buying.
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